consumption the comparative figures of duty per head (about 22s. 2d. in 1925-26, as compared with about 10s. 6d. in 1913-14) are not in themselves illuminating.

642. In attempting to gauge the amount consumed by persons with incomes up to £200 (see tables in para. 255 and in Appendix X), we have come to the conclusion that, in the aggregate, it must account for a large proportion of the total consumption. It appears that the man whose normal drink is beer may very commonly consume a sufficient amount of whisky to suffer an appreciable amount of tax. The consumption of spirits varies, in some degree, in different localities; from evidence put before us, it appears that in the North of England a much higher proportion of drink expenditure goes into spirits than in the Midlands, although on the other hand it is much less than in Scotland. In the South West of England the proportion is likely to be the smallest.

643. The duties on luxuries. (iii) Beer.-In general beer is the staple alcoholic drink of the working classes. A table giving full particulars of consumption and duty, 1913-14 to 1925-26, is included in Appendix IX.

644. The main rate of duty is that on home-made beer. The duty on imported beer is now higher by 1s. 4d. per standard barrel, in order to countervail the licence duty on brewers, the cost of Excise restrictions to the home brewer and the duty on imported hops. The standard barrel" is 36 gallons of an original gravity of 1055 degrees. In 1913-14 the actual average gravity was nearly 1053 degrees; during the War it was greatly reduced, under control, and has since risen to about 1043 degrees.

66

A

645. During the War consumption was heavily reduced. comparatively slight reduction followed the increase in taxation in November, 1914, from 7s. 9d. per standard barrel to 23s. From 1916-17 onwards the determining factor was restriction of output, which continued, though with gradually decreasing stringency, till the 1st July, 1919. In 1918-19 the consumption amounted to 12,721,000 standard barrels, as compared with 35,446,000 in 1913-14. Owing to reduced strength, the disparity in the actual amount of liquid was less marked, the comparative figures being 23,060,000 bulk barrels in 1918-19 and 36,947,000 in 1913-14.

646. Side by side with restriction of output, the duty was raised from time to time. On the 23rd April, 1918, it reached 50s. per standard barrel; on the 1st May, 1919, it was put up to 70s., and on the 20th April, 1920, to 100s. It remained at this figure until the 1st April, 1923, as from which date a reduction of 20s. per bulk barrel has been in force except in the lowest gravity beers.

65184

H

647. The approximate duty per pint, and the retail price of the quality commonly sold, have been as follows in 1913-14 and in the post-war years :

...

Approx. duty

per pint.
d.

Retail

price.

d.

648. It will be seen that before the War the duty was approximately 10 per cent. of the retail price; on a beer of lesser gravity the duty is now over nine times more than before the War. Recent consumption has been rather less than twothirds that of 1913-14 in terms of standard barrels, and about three-fourths in terms of bulk barrels, although there has been some increase following the 1923 reduction of duty. The main causes of reduced consumption other than taxation are of the same kind as those affecting whisky.

649. Even with reduced consumption, the duty on beer falls with great weight on the average or normal consumer of small means. The duty per head of the population (including children and adults who do not drink beer) is now over £1 16s. In a working man's family, where, may be, little or no spirits and wine are consumed, an income of £150 may quite typically bear about £7 or £8 duty, and an income of £200 rather more.

650. The duties on luxuries. (iv) Wine.-The duty on wine provides only a small part of the revenue from alcoholic liquors A table giving full particulars of consumption and duty is included in Appendix IX. It will be seen that the rates of duty vary according as the wine is imported in cask or in bottle, according to its strength, and according as it is still or sparkling. The average rate of duty in 1925-26 was about 4s. 8d. per gallon.

651. For the sake of illustration, approximate figures may be given to show the duty on certain wines, of quality largely sold, in 1913-14 and in post-war years. For champagne a nonvintage wine is taken in order to get comparable prices throughout.

66

652. As regards the course of consumption during and after the War, we may quote from the Eleventh Report of the Commissioners of Customs and Excise (Cmd. 1082, page 34). After relating the partial prohibition of imports from the 23rd February, 1917, onwards, and restriction of clearances for home consumption from April, 1917, they proceed : the consumption of wine fell heavily on the outbreak of War in 1914, but it recovered somewhat in the early part of 1915-16, owing probably to some substitution of wine for spirits, the price of which had risen. A decline set in again towards the end of 1915-16 with the result that consumption was probably less in 1916-17 than in the previous year. In 1917-18 consumption was brought much lower by the restrictions on clearances mentioned above, although it was no doubt larger than the clearances indicate, as duty-paid stocks were drawn upon. In 1918-19, with the removal of restrictions on imports and clearances alike, there was a large expansion, helped by the continued shortage of beer and spirits. In 1919-20 clearances, and probably consumption, rose to a figure never before reached."

653. In 1920-21, clearances fell very greatly and consumption to a less (but still great) extent. The fall cannot be accounted for by the increase of the duties, for prices rose only to a moderate extent. The advent of the trade depression was, no doubt, a contributing cause. But the 1919-20 consumption was quite exceptional, being probably due to some extent to peace celebrations, and the figures for 1919-20 and 1920-21 afford no indication of the normal effects of a slump. There was a further fall in 1921-22, bringing the figures below those of 1913-14, but in subsequent years there has been a continuous rise.

654. The duties on wine have been less severely increased than those on spirits and beer, and form a lesser element in retail price. The per head consumption of the wage-earning classes is believed to be very light, but it seems that it varies in different parts of the country and that a fair proportion is often consumed by women. The duties are not a considerable burden to the moderate consumer at any point on the income scale.

655. Entertainments Duty.-This duty on the payment for admission to an entertainment was first imposed by the Finance (New Duties) Act, 1916. A table showing the various rates which have been in force in successive years is included in Appendix IX, together with a brief note of the principal exemptions now granted.

It will be seen that the duty as first imposed was d. for payments of 2d. and under, and 1d. for payments between 2d. and 6d. It then rose, by four steps, to ls. for payments between 7s. 6d and 12s. 6d., with an additional 1s. for each further 10s., or part of 10s.

65184

H 2

From 1917-18 to 1923-24 the duty for payments up to 6d. was graded from d. to 2d. by steps which were modified in 1918-19 and 1919-20. In 1917-18 3d. was charged on a payment between 6d. and 7d., but this was reduced to 2d. in the following year.

For the same seven years, 1917-18 to 1923-24, the graduation of the duty for payments above 7d. remained unaltered, rising by six steps from 3d. on payments up to 1s., to 2s. on payments between 10s. 6d. and 15s., with an additional 6d. for each further 5s. or part of 5s.

In 1924-25 the duty for payments up to 6d. was abolished, and reductions were made in the duty chargeable on payments up to 1s. 3d.

656. The rates of the Entertainments Duty are fixed by reference to price. The following table will illustrate the graduation immediately before and after the Budget of 1924. The payments shown represent in each case (except for the figures in italics) the upper limit of a range to which a differential rate of duty applies or did apply in 1923-24 :

Up to 1923-24 the high rates of duty on payments up to 6d. and 1s. as compared with those on larger payments were an obvious mark for criticism.

657. The revenue derived from the Entertainments Duty has been as follows for Great Britain :

The revenue in 1921-22 appears to have been affected by the great increase in unemployment. Wages for employed persons remained relatively high throughout 1921, but in the latter part of 1922 and in 1923 they fell heavily, and their lower level, together with continued unemployment, was no doubt one of the reasons for the further diminution of revenue in 1922-23 and 1923-24. The revenue from 1921-22 onwards has also been restricted in a minor degree by the extension of various reliefs. The great reduction following on the Budget of 1924 (taking effect from the 2nd June, 1924) shows how large a proportion of the receipts had previously come from duty on the smallest payments. It has been estimated that, at the present rates, payments exceeding 6d. and and not exceeding 1s. 3d. are responsible for a yield of approximately £3,400,000 out of a total £5,800,000 (H. of C., Official Deb., Vol. 191, Col. 1721).

658. The duty has presumably had some slight effect on expenditure, particularly in the case of the smaller payments in years prior to 1924-25. It may be noted, however, that the price of entertainments has not increased in proportion to the general advance in the cost of living. On this account, and on account of the greatly increased provision of cheap entertainment, the general standard of living seems clearly not to have been depressed so far as concerns the enjoyment of leisure in this direction.

Regarded simply as a tax, the duty under the existing scale appears to be quite a light burden for all classes of income, except where expenditure on amusement is unusually large. Prior to 1924-25 its weight on the smallest incomes was more considerable.

659. Conclusions.-In any general conclusion as to the effect of the Customs and Excise duties on the standard of living, it is necessary to bear in mind that the duties contribute sub stantially to expenditure on education, pensions, unemployment relief, &c., from which the wage-earning classes largely benefit. Again, it must not be forgotten that some indefinable part of the duties although, as we have said, it does not seem to be a very considerable part-is balanced in many cases by an increase in wage-rates due to the tax element in the cost of living (cf. paras. 598-614).

660. When proper allowance is made for these aspects, we consider that the food duties, even at their present reduced level, must still exercise some adverse effect on the standard of living of the poor, although on the whole that standard may be slightly better than in the year 1913-14. We have in mind the fact that, while the tea duty is lower than before the War, the duty on sugar-a prime necessity-is at a rate more than six times that in force before the War.

661. On a survey of the several duties, it becomes apparent that their effects are much linked together The connection is

65184

H 3